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Competitive versus comparative advantage
Neary, J. Peter
I explore the interactions between comparative, competitive and absolute advantage in a two-country model of oligopoly in general equilibrium. Comparative advantage always determines the direction of trade, but both competitive and absolute advantage affect resource allocation, trade patterns and trade volumes. Competitive advantage in the sense of more home firms drives foreign firms out of marginal sectors but also makes some marginal home sectors uncompetitive. Absolute advantage in the sense of a uniform fall in home costs tends to raise home output in all sectors but also leads both countries to specialise less in accordance with comparative advantage. Economic and Social Research Council (ESRC)
Keyword(s): Comparative and absolute advantage; Comparative and competitive advantage; Exchange-rate protection; GOLE (General Oligopolistic Equilibrium); Market integration; F10; F12; Comparative advantage (International trade); International trade; Oligopolies; Competition
Publication Date:
2009
Type: Working paper
Peer-Reviewed: Unknown
Language(s): English
Institution: University College Dublin
Publisher(s): University College Dublin. School of Economics
File Format(s): other; application/pdf
First Indexed: 2012-08-25 05:22:44 Last Updated: 2018-10-11 15:45:06